Every year, the American Arbitration Association-International Centre for Dispute Resolution (AAA-ICDR) administers thousands of consumer arbitration matters, and, over time, those have grown in variety and sophistication. Disputes involving solar power, sales of electric vehicles, data privacy, emerging technologies like cryptocurrency, and the gig economy now make up a significant portion of filings.
Each area raises new issues, different legal principles may apply, and new types of parties are involved. Arguments over the specific technical aspects of the products have become more common; these disputes can delve into topics ranging from battery performance to SIM swap fraud to the inner workings of web-based advertising. Warranty and terms of use agreements are longer and more sophisticated than ever, and they include arbitration provisions that have been crafted with great care. Historically, consumer cases were considered “simple” matters, but these are not your parents’ consumer cases.
The AAA-ICDR has adapted to these changes by:
- embracing virtual hearings,
- addressing emerging technology disputes, and
- upholding procedural safeguards to help ensure fair and enforceable outcomes.
As the quantity of cases and the stakes in individual cases grow, a fair process has become even more critical.
Consumer claims may arise out of an agreement that applies to thousands or millions of consumers. Although some consumer arbitration clauses contain opt-out provisions, consumers generally do not have much choice about how their dispute will be resolved. When a consumer contract calls for arbitration to be administered by the AAA-ICDR, we require a baseline level of due process protections as set out in the Consumer Due Process Protocol and the Consumer Arbitration Rules. For example, the Protocol and Rules call for:
- a fundamentally fair process,
- at a reasonable cost (not more than $225 to the consumer),
- in a reasonably convenient location,
- before a neutral arbitrator who can allow for discovery necessary for a fundamentally fair process and all remedies that could be available in court.
These procedural safeguards cannot be replaced with a simpler process; otherwise, the AAA-ICDR will not administer the case and any decision of the arbitrator could potentially be subject to vacatur. This is possibly the worst outcome for an arbitration process, because the parties who have spent the time, money, and energy going through the process usually must go through it again to resolve their case. Balancing the considerations of fairness and speed helps ensure that the outcome will withstand further challenges and that parties can move on from the dispute. In 2023, the median time from filing to award for consumer cases administered by the AAA-ICDR was 9.6 months, while it was 35.6 months for cases in US district courts.[1]
Filing to Award: Consumer arbitration cases filed with the AAA that proceeded to hearing and award in 2023 did so much more quickly compared to US district courts. Source: “2023 Consumer Arbitration Statistics,” AAA-ICDR.
Expert, diverse arbitrators are needed to decide consumer disputes.
It is more important than ever to have arbitrators experienced in consumer law deciding consumer arbitrations. The nuances of consumer claims require arbitrators who are familiar with modern technologies and how people interact with them, as well as the law governing those interactions. Arbitrators who educate themselves and interact with these technologies are more likely to serve the parties and the process better than those arbitrators who rely on an assistant to “work the computer.” A roster of arbitrators should also reflect the diversity of the population served to help ensure fair outcomes. Thirty-nine percent of those on the AAA-ICDR’s consumer roster are women and/or people of color, with 39 percent of appointments going to panelists from that group.[2]
Transparency about consumer arbitration cases and outcomes is important.
The AAA-ICDR provides information about our cases in several forms. Each quarter, we update our Consumer and Employment Arbitration Statistics Report,[3] which shows case data for all consumer matters closed within the last five years. This report does not show the consumer party’s name but contains information about the opposing party, arbitrator, and case outcome, as well as other important data. We also maintain a quarterly report on arbitrator demographic data.[4] Both of these reports are free and available to the public.
In addition to these reports, the AAA-ICDR anonymizes and provides for publication of consumer awards. These awards are available via legal research sites and contain the identity of the arbitrator as well as the text of the award.
Virtual hearings are here to stay and have clear benefits for consumer disputes.
The COVID pandemic shifted much of our lives online, and consumer arbitration was not exempt. Virtual hearings have become the norm in our cases, even as the world has returned to in-person activities.
The popularity of virtual hearings seems to indicate that most parties have grown comfortable presenting their cases via those platforms and that arbitrators are comfortable hearing cases in that manner. Virtual hearings also improve access to justice, allowing parties to attend from a comfortable and familiar location without paying for travel costs, with electronic management of evidence, and with less disruption to their work and family obligations.
Technology will continue to enhance the dispute resolution process for consumers.
Online Dispute Resolution (ODR) could be the future of resolving consumer disputes. Online Dispute Resolution can be used as a step in a dispute resolution program and incorporates both binding and nonbinding processes. Various successful ODR tools already resolve over sixty million cases per year and could serve as the model for new platforms to be implemented on a broader scale.[5]
Artificial intelligence is already impacting dispute resolution, with new tools and services appearing frequently. Parties can build a clause with the AAA-ICDR’s ClauseBuilderAI, edit drafts and analyze documents with GenAI tools like ChatGPT or Claude, and make use of AI transcription services for their hearings. While some AI tools are priced for mid-sized or large law firms, the capabilities of more widely available platforms continue to increase while the cost remains relatively low for an individual subscription. Free platforms also continue to advance, potentially increasing access to justice.
Consumer arbitration has evolved significantly, reflecting the complexities and technological advancements of modern disputes. The AAA-ICDR’s adaptation to these changes, through the embrace of virtual hearings, addressing of emerging technology disputes, and upholding of procedural safeguards, helps to ensure a fair and efficient process. With the growing importance of an expert and diverse group of arbitrators, transparency in case outcomes, and the integration of technology such as ODR and AI tools, the future of consumer arbitration is poised to offer even greater accessibility and effectiveness. These advancements not only uphold the fundamental principles of fairness and due process but also enhance the efficiency and adaptability of the arbitration system, ultimately benefiting all parties involved.
“2023 Consumer Arbitration Statistics,” AAA-ICDR, accessed September 18, 2024. ↑
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“2024 Q1 Consumer and Employment Arbitration Statistics Report,” AAA-ICDR, accessed September 18, 2024. Note: The link to this source begins a spreadsheet download. ↑
“2024 Q1 Arbitrator Demographic Data,” AAA-ICDR, accessed September 18, 2024. ↑
